  | |
| |
 |
|
| ||
Ux relights SA mining industry Posted: Fri, 02 Mar 2007 [miningmx.com] -- WHEN Neal Froneman first said he wanted to mine uranium, many thought he was clutching at straws. “One radio presenter laughed me out of his studio,” said Froneman whose sxr Uranium One (Uranium One) last month announced an imposing R22bn ($3.1bn) merger with Canadian firm, UrAsia Energy. The ridicule, or at best, faint scepticism was in 2003 when Froneman’s plan to mine gold from Afrikander Leases (Aflease) in Klerksdrop was derailed by the strong rand. It was a lesser-known fact at the time that Aflease also owned the well-drilled (by AngloGold) Dominion Reefs uranium resource. To general surprise, Froneman announced his near bankrupt company would now mine it. It looked like classic horse changing, mid-stride. What happened next was a reinvention that took Aflease’s stock from R3/share to more than R90/share. Peter Major, an analyst for Cadiz, who has been critical of the UrAsia Energy merger, acknowledged Froneman was incredibly quick to pick up the strands of the uranium story. “He’s run the uranium trend aggressively. He picked it up very early,” said Major. Said Froneman: “I took a month’s leave in December 2004 and read every possible article on uranium. I made it my business to see how the market would look in a few years’ time.” Since then, perceptions about uranium have changed so dramatically that the mining of metal has become the subject of Government edict, and the business imperative of every major South African gold producer. The South African government also wants to tie uranium development to downstream business in an attempt to capture new investment in the sector, which is flowering. In fact, there’s no gold mining executive in South Africa who isn’t now considering digging for uranium. Harmony Gold’s Bernard Swanepoel is hoping to swap his company’s uranium assets for potential gold ounces in Russia owned by Victor Vekselberg’s Renova Group. “There’s a good sense of wanting to co-operate,” said Swanepoel. “But the devil’s in the detail,” Swanepoel added. The plan might see Renova Group build a uranium plant next to Harmony’s Randfontein mine west of Johannesburg, which has an estimated 124 million pounds of low-grade uranium in slimes dams. AngloGold Ashanti, meanwhile, has already recognised some value in the uranium stockpiles it has through its 50% stake in Britain’s Nufcor International. This was achieved through the listing of the £110m Nufcor Uranium on the Alternative Investment in which Nufcor International has a 10% stake. More recently, however, AngloGold Ashanti CEO, Bobby Godsell, has spoken of “a case for looking at a separate investment structure” for uranium if investors began investing in uranium differently from gold. Uranium’s single most important call on our attention is its function as the raw material of cheap, abundant nuclear fuel. Against a background of power blackouts in South Africa, there’s no understating the economic relevance of the fact that a kilogramme of uranium produces as much energy as 38 tons of coal or 150 barrels of oil. Government said it would grasp the nettle. The Trade and Industry department has spoken of spending R900bn developing 12 conventional nuclear reactors and as much as 24 Pebble Bed Modular Reactors (PBMRs) in South Africa. French state-owned company, Areva, the entity that helped develop the PBMR, has shown an interest in helping South Africa build its nuclear capacity. The number of reactors South Africa will actually need is not known, but emerging markets throughout the world are chasing down similarly ambitious energy creation targets. Hargreaves Hale, a UK stockbrokerage, reckoned in a 2006 report that of the 178 nuclear reactors under construction, planned or proposed globally, more than 60 were wanted in China and India. Demand for new nuclear reactors represented a 40% increase as emerging and first world countries seek to reduce their reliance on traditional forms, normally fossil, fuel. Even in first world economies, the move towards nuclear fuel is dramatic. Said Darryl Levitt, strategic consultant at law firm, Fasken Martineau DuMoulin, in Toronto: “The province of Ontario, when faced with a looming energy crisis, recently opted to move away from coal and more into reviving its nuclear programme. Building and refurbishing nuclear plants in the region will cost R144bn ($20bn),” he said. Consequently, the pressure on uranium oxide, the raw material used to manufacture nuclear fuel, is enormous, and sources of supply are clearly falling. Total world reactor uranium oxide requirements in 2004 were 172 million pounds compared to a primary supply of 104 million pounds. There are above ground stocks in the form of decommissioned nuclear weapons, mostly Russian, but this is exhaustible. The numbers underpin what’s happening in the uranium oxide market, the raw mined material known as “yellow cake”, where prices have ballooned to $90/lb from under $20/lb in 2003. Said Australia’s Resource Capital Research: “The uranium price is forecast to reach $90/lb by mid-2007, an increase of 37% over the current spot price and $115/lb by late 2008, a 75% increase over the current spot price.” This has spawned a veritable pond of new uranium plays of which sxr Uranium One is among the first. But there are others in formation. First Uranium, which listed in Canada in December raising about C$232m, is a prime example. “The listing of Uranium One (Froneman’s company) really helped us. Someone went first,” said Jim Fisher, COO of First Uranium, in which Johannesburg’s Simmer & Jack Mines has a 64% stake. Fisher believed new uranium counters would offer gold companies better opportunities to get into uranium. “To come into the uranium market where we think we’re nearing the top of the cycle maybe not the brightest thing,” said Fisher. First Uranium could, therefore, present itself as a viable partner to companies like AngloGold Ashanti or Gold Fields. The South African government’s view on uranium is one of embrace, particularly given the country’s ranking in world uranium resources. Mines minister Buyelwa Sonjica wants to tie up acquiring new uranium resources with plans to beneficiate yellow cake into actual fuel. She claimed the South African government isn’t interested in constraining exports, but the solution to South Africa’s energy crisis lies within its own borders. Froneman agreed that downstream development is necessary in South Africa and wanted Uranium One to participate. “We’ve approached Eskom and told them Uranium One will provide power. “Uranium One wants to become a nuclear energy company, and we’d like to become partners in processing energy. Perhaps we could become partners in selling the PBMR. It’s a long-term strategy of ours but you’ve got to start somewhere,” he said. So, how long before South Africa sees the benefit of the uranium phenomenon? According to Tom Ferreira, spokesman for PBMR Ltd, the registered company managing the technology, the first sign of PBMR will only be in a small test plant in 2008. A commercial module won’t be available until 2016. Click Here to subscribe to our daily newsletter
| |||||||
